The present invention relates to providing optimized pricing for a subset of a plurality of products for a plurality of stores.
In businesses, prices of various products must be set. Such prices may be set with the goal of maximizing profit or demand or for a variety of other objectives. Profit is the difference between total revenue and costs. Total sales revenue is a function of demand and price, where demand is a function of price. Demand may also depend on the day of the week, the time of the year, the price of related products, the location of a store, and various other factors. As a result, the function for forecasting demand may be very complex. Costs may be fixed or variable and may be dependent on demand. As a result, the function for forecasting costs may be very complex. For a chain of stores with tens of thousands of different products, forecasting costs and determining a function for forecasting demand are difficult. The enormous amounts of data that must be processed for such determinations are too cumbersome even when done by computer.
It is desirable to provide an efficient process and methodology for determining the prices of individual products such that profit (or whatever alternative objective) is optimized.
During optimization, it may be found that one of the plurality of rules is infeasible. Such a finding of infeasibility may stop the optimization process. It would be desirable to provide a method of handling optimization when a rule is found to be infeasible.
It is desirable to update prices as new information about the products and competitive environment is received. Examples of this type of information would include product cost updates, product addition or discontinuance, and new competitive price or base price data. Ideally, when a user receives new information, they would run a secondary optimization over a whole product category. This would allow the optimization to fully capture all of the complementary and substitution effects in selecting the new set of optimal prices. However, if the cost of changing prices is not negligible, optimization and changing prices of all products in a whole product category may not be desirable.